All About Guaranteed Issue Medicare Supplement Plans

Do you know which seven scenarios warrant guaranteed issue rights?

Guaranteed issue plans are in place for people whose coverage is changing through no fault of their own. Also referred to as Medigap protections, guaranteed issue rights may protect your clients from medical underwriting. If this type of plan is necessary for your client, an insurance company:  

Since health insurance companies often use health history and data on a prospective client's pre-existing conditions to determine whether or not he or she will be covered and the amount of coverage provided, guaranteed issue rights are in place to protect those who may not be eligible otherwise. If your client needs a guaranteed issue Medicare Supplement, an insurance carrier will cover all pre-existing health conditions and will not charge for a Medigap policy due to health reasons.

Carriers tend to not favor these polices, so they pay lower commissions. Therefore, it is better to get your client through with underwriting if possible, but if not, you will still be able to ensure that your client is covered with a guaranteed issue plan.

There are seven scenarios in which prospective clients have a guaranteed issue right. This can be confusing for both the agent and the insured, so we have outlined each scenario below to make guaranteed issue plans easier to navigate.

1. Your client is moving out of a Medicare Advantage plan's service area, or a plan is leaving their service area

This protects your client if they move out of their Medicare Advantage plan's service area, or if the carrier stops operating within their area. As early as 60 days before coverage ends, but no more than 63 days after coverage ends, your client can apply for a Medicare Supplement if they want to switch to Original Medicare instead of enrolling in a different Medicare Advantage plan. The new Medicare Supplement's basic benefits will begin once Medicare Advantage coverage ceases.

2. Your client has both Medicare and an employer-sponsored group health plan which is ending

If your client has Original Medicare parts A and B and an employer group plan (such as retiree or union coverage) that pays out after Medicare pays its share, and this employer coverage is ending, then in most states your client can purchase Medicare Supplement options no later than 63 days after any of the following events:

3. Your client stopped their Medigap policy to switch to a Medicare Advantage plan or Select policy, and would like to switch back before a year has passed

As early as 60 days before coverage ends, but no later than 63 days after coverage ends, your client can buy the same Medicare Supplement plan they had before joining their new Medicare Advantage or Medicare Select plan. If that plan is no longer available, they can buy any Medicare insurance Plan A, B, C, F, K, or L (For anyone that has aged into Medicare prior to 2020) that is available in their location. This is an example of trial right.

4. Your client joined a Medicare Advantage Plan or programs of all-inclusive care for the elderly (PACE) when they were first eligible at age 65, but within the first year of joining, they decide to switch to Original Medicare

In this case, as early as 60 days before coverage ends, but no later than 63 days after coverage ends, your client has the right to buy any Medicare Supplement plan that is sold in their state by any insurance company. This is another example of trial right.

5. Your client has Original Medicare and a Medicare Select policy and moves out of the Medicare Select service area

As early as 60 days before the date that their Medicare Select coverage will end, but no more than 63 days after coverage ends, your client can buy any Medigap insurance Plan A, B, C, F, K, or L (For anyone that has aged into Medicare prior to 2020) that is sold in their new service area. Call the Medicare Select insurer for more information about your client's options.

6. Your client's Medicare Supplement insurance carrier goes bankrupt, or their coverage otherwise ends through not fault of your client's

No later than 63 days from the date that coverage ends, your client can buy a Medigap insurance Plan A, B, C, F, K, or L (For anyone that has aged into Medicare prior to 2020). 

7. The Medicare Supplement carrier did not follow the rules or was misleading

Just as in the case above, no later than 63 days from the date that coverage ends, your client can buy a Medigap insurance Plan A, B, C, F, K, or L (For anyone that has aged into Medicare prior to 2020). 

More About Guaranteed Issue Plans

A beneficiary with no guaranteed issue right who chooses to back out of a Medicare Advantage plan could face medical underwriting when applying for a Medigap policy. This could also be the case for those changing from a different plan or a different insurance carrier's plan.

Guaranteed issue right is not a problem when applying for a Medicare Advantage plan. A carrier cannot deny coverage to an eligible applicant, with the exception of end-stage renal disease patients who cannot initially enroll in a Medicare Advantage plan.

There are four states that offer more generous guaranteed issue rights: Connecticut, Maine, Massachusetts, and New York. Each state has different rules. A few other states allow people with a Medigap policy to make changes at certain times during the year. Check with your state to determine its state-specific rules.

Medicare Supplement Resources

Download: 2020 Choosing a Medigap Policy. A guide to health insurance for people with Medicare.